Polish Business Associations The Polish Case



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Polish Business Associations

The Polish Case


Approximately seventy five percent of Poland's GDP is now produced by the private sector. This transformation of the communist economy has occurred not so much through privatisation but by the rapid growth of a new private sector. Poland was the first country to tumble into a post-communist recession and the first to reemerge. In the mid-1990s it enjoyed strong growth, but its economy has since slowed down. Both inside and outside Poland there is a myth that Polish labor unions are very strong. In fact, about twenty percent of the Polish workforce belongs to labor unions. Unions are almost non-existent in Polish small and medium-sized enterprises (SMEs), and relatively rare in the private sector. Where they do exist, unions play a relatively marginal role in the enterprise.

The Polish political vocabulary can be misleading. The left tends to be secularist and rooted in the communist party or its satellites. The right tends to be traditionalist and rooted in the opposition to communism. In the 1997-2001 parliament, the main political blocs of the right, Solidarity Electoral Action, and of the left. Union of the Democratic Left, both contained strong pro-labor and pro-business factions as well as a large group of members who were pragmatic or agnostic on economic issues. The center, rooted in the liberal intelligentsia, tends to represent the interests of business and technocrats. While the left-wing party has been stable since the early 1990s, deep fissures have opened repeatedly on the right, and-—-to a lesser extent—in the centre.

The president's main power resides in the veto, which has been used to prevent important but controversial policies. A presidential veto can be overridden only by a sixty percent majority in Parliament. The relative power between the executive and the legislature has depended on the partisan composition of the government. The left-wing parties have been disciplined enough to support a relatively strong government, while the center and right-wing parties are fractious and undisciplined, making the governments they support much weaker.

The main feature of the Polish case is that in Poland the state delayed before trying to encourage businesses to adhere to its preferred structure of association, and even since then it has not made a determined effort to influence the structure of business association. As a result, top-down influences on Polish business associations have been weak. Most East Central European countries, all of which abandoned communism later than Poland, moved almost immediately to set up a tripartite structure which recognized and privileged one or a small number of business associations. Poland did not do so until almost five years after the formation of the first non-communist government. In contrast to, for example, the Czech and Hungarian tripartite institutions, the Polish tripartite commission has not played an important role in the transition to capitalist democracy. In spite of the best efforts of the Polish Chamber of Commerce, Poland has not opted for a system of compulsory chambers of commerce, similar to that of Hungary.

Another possible top-down factor is the role of the European Union (EU). The engagement of Polish business associations on the European level has been weak, their role in Polish negotiations with the EU has been very limited, and, despite some support for local-level business associations, the EU's direct influence on the pattern of business association in Poland has been marginal. Polish employer confederations and the chamber of commerce have affiliated themselves to European-level organizations. Many Polish business associations have taken European groups as their model, but European-level associations have had little influence over the actual behavior and nature of individual associations, never mind the overall structure of business association. In the case of the employer confederations, the European-level body, the Union of Industries and Employers of the European Union, has been unable to prevent fragmented Polish representation. This lack of influence of the EU and European interest groups on the structure of national business association is typical of most EU member states.

The EU has had an indirect effect on the structure of Polish business associations via its effect on Poland's economic structure. The pressure from the EU for the reform of Poland's heavy industry and the Union's reluctance to open fully its own markets in some industries undoubtedly have had an effect on the balance of power within Polish business associations. While the EU's economic influence is obviously profound it does not necessarily follow that it has had a crucial influence on the pattern of business association. This type of EU influence is mediated by the Polish state and the Polish business community itself. Also, it is worth noting that changes in Poland's economic structure have domestic roots that precede any EU involvement.

Another indirect effect of the EU is the fact that foreign investment is predicated upon eventual EU membership. Foreign investors have played a relatively minor role in Polish business associations, although large investors may engage in direct lobbying, perhaps with the aid of local consultants. There are some associations dedicated to the interests of foreign investors and many foreign firms are affiliated with Polish business associations. Nonetheless, these firms have largely stayed out of the politics of Polish business associations. Overall, the EU, EU interest groups, and international investors, like the Polish state itself, have left Polish business associations to develop largely spontaneously, thereby allowing a relatively pure lest of the two bottom-up hypotheses.

It is widely acknowledged that Poland had the least totalitarian of communist regimes. Civil society outside of the official regime was highly developed, especially regarding the church and the opposition movement. This was also evident in the economy, which had always, exceptionally, maintained an independent peasantry and in the 1980s had rapidly developed a significant private business sector. Within its state-owned economy, Poland was notorious for the lack of central direction and its collapse into a battle of mighty but narrow economic lobbies.


The Confederation of Polish Employers ("The Confederation")


Origins. The Confederation views itself as a successor to pre-communist Polish peak associations. Four associations, which represented the opposition movement, the private sector, state enterprises in the process of "nomenklatura" privatization (alegal privatization in which the bosses transfer ownership to themselves), and traditional state enterprises, founded the Confederation in 1989. The Confederation's first president was elected on an opposition ticket to the Senate in 1989. After his resignation due to persistent rumors of illegal arms deals, he was replaced by his right-hand man and the organization's secretary-general. The next two presidents have had strong links to communist and ex-communist politics, but have earned their living through relatively modest private sector operations rather than being captains of communist-era monoliths.

Collective action. The Confederation's claimed seventy thousand members represent only around two percent of Poland's enterprises, but this includes most of its largest enterprises. Its members employ eight hundred thousand people. The Confederation represents under a quarter of Polish employer organizations. The membership density of the associations ranges from one hundred per cent in some state-dominated sectors to a tiny fraction in some private sectors. However, perhaps the most striking characteristic of the Confederation is how it has been emasculated by its failure to overcome collective action problems. Its member associations are new and underdeveloped, and they depend on huge constituencies of small, cash-strapped firms. The weakness of Poland's labor unions undermines a central incentive to join employer associations. Many of the Confederation's member associations do not pay fees but are kept on the books in order to maintain some vestige of prestige and credibility for the organization. The Confederation has a very low level of organizational development. Most of its work is done by volunteers from the membership. Even so. there are several incentives for membership, including networking opportunities for individual businesspeople and the chance for individual firms to obtain private goods from the political system. A similar pattern exists in many of the first and second-order member associations. However, some member associations, like the Warsaw and Mazowsze Employers Association, are dynamic and, like the Business Centre Club discussed below, have found imaginative solutions to the legacy of a flattened civil society which has stymied the Confederation.

Internal politics. The Confederation is an encompassing organization. Its members include representatives of virtually all interests in the Polish economy. One of the failings of the benign assessments of encompassing groups by Olson and others is these authors' disregard of internal politics. Collective action problems and latent, intermediate, and privileged groups also exist within these groups. In the case of the Confederation, the old-fashioned state and privatized enterprises have significant collective action advantages and wield influence disproportionate to their share of its membership, employment, or any other measure. This has even been institutionalized in a Constitution which favors the best organized. However, to view the Confederation as an organization that has been hijacked by the state sector would be inaccurate. Although the slate sector is dominant, the vast majority of members are private and their concerns are taken into account in the Confederation's political campaigns.

The Confederation and national politics. Until recently, the Confederation has monopolized employers' representation on official tripartite bodies. The overall influence of these bodies on policy has been very limited, although some may have been useful in helping individual Confederation firms. The most important such body is the Tripartite Commission, which helped between 1993 and 1997 to preserve an atmosphere of social peace under the leftist/peasant coalition. In terms of hard policy outputs, its main role has been the setting of state-sector wages. While state-sector wages in industry have compared well to those in the private sector, this cannot be ascribed to a super-lobby performance by the Confederation. State-sector wages for ordinary industrial workers tend to be better in other post-communist and non-communist countries. Outside of this particular area the Commission has been marginalized, and within the Commission the Confederation has often been sidelined by unions and the government.

The Confederation has a statutory right to consultation on all laws in its ''sphere of activity;" however, the state often gives it little time to form and present its positions and—if they are forthcoming—ignores them completely. The Confederation has never been the creature of a particular political party or faction, as was the case for Confindustria in Italy. However, recently it has moved much closer to the Union of the Democratic Left, which has sponsored its defense against the upstart Private Confederation (see below). Another reason for the marginalization of the Confederation is the endemic personalism of Polish politics. Personal connections are usually a better way of pursuing public and private goods than through the auspices of a weak organization like the Confederation.


The Business Center Club (The Club)


Origins. Unlike the Confederation, the Club does not claim to be the heir to any tradition in Polish business association, but is dedicated to the invention of its own tradition. Officially the Club was founded in 1991 by a group representing a wide range of political and economic backgrounds, including former ministers, senators, private entrepreneurs, state-enterprise directors, journalists, and academics. However, the origins of the Club seem to lie in the vision of its charismatic President, Marek Goliszewski.

Collective action. The Club has 1900 individual members from over 1000 companies, which as a group employ about eight hundred thousand people. There is some overlap in membership with the Confederation, and significantly more overlap with the other business associations assessed below. High membership fees exclude the very small businesses that are members of the Confederation. In contrast to the Confederation and most of its members, the Club provides a wide range of private goods via a relatively well-developed organization. These include business-matching, seminars, and product promotion. A perhaps distinctively post-communist good is the guarantee of trustworthy business partners in a situation where many businesspeople's networks are undeveloped and in which the state's legal system is too weak to provide effective enforcement of contracts. Some members also value the Club's social goods. While the Club is a hard-nosed special interest group, it often presents itself as a rather glitzy and publicity-seeking version of an English gentlemen's club. For this reason many members see it as prestigious. Finally, the Club's "Intervention Office" provides an important service by helping members involved in individual disputes with the state. The Club has clearly mobilized a latent group in the difficult conditions of a flattened civil society.

Internal politics. Collective action theory predicts that when members are motivated by private goods they will be less concerned with an interest group's internal politics. So it is with the Club. However, the main reason for the centralization of power in the Club is the fact that it is effectively a private company controlled by one man, the Club's founder and perennial president. Nonetheless, as a private business the Club clearly has an incentive to represent its members' views accurately. Although it has a series of impressively titled consultative committees, recently it has begun to operate via e-mail surveys.

The Club and national politics. The Club offers less support for the idea of an autonomous state. It is generally regarded as the most powerful business association in Poland and is far and away the best known. Although the Club has no legal right to consultation policymakers regularly consult it on a non-statutory basis. It also has excellent media connections and is frequently covered in Poland's quality and business press. Until recently, the Club has stayed away from too close an association with any political party, claiming that it would support individual pro-business candidates. However, the Club and its president seem to have played a substantial role in the foundation of the Citizens' Platform which is now the second biggest party in the Polish parliament and is unequivocally pro-business and free-market in its views. Rather than being bypassed by the personalism of Polish politics, the Club tends to work proactively to help coordinate the lobbying of its members and activists when they cannot access policymakers directly.

The Polish Chamber of Commerce (The Chamber)


Origins. Like the Confederation, the Chamber identifies itself with pre-communist organizations. During the 1980s a movement of chambers of commerce emerged, linked to the opposition. Several representatives of this movement were elected to parliament in 1989 and managed to get a law passed which legalized the chambers, giving them the right to present their opinions on laws and bequeathing the assets of the old Chamber of Foreign Trade to the new Polish Chamber of Commerce. Rather than a merger, this constituted a straightforward takeover of the communist institution by the new organization. Although state enterprises later joined the Chamber, the founding elite has maintained its leadership.

Collective action. The Chamber has 150 member organizations which represent approximately 350 thousand businesses. Its members include territorial, bilateral (e.g., Polish-American Chamber of Commerce), and sectoral chambers (which are candidates for super-lobbies), and a plethora of other organizations. While the Chamber has a much greater proportion of primary chambers (i.e., chambers which have businesses as members) than the Confederation does of employer organizations it is far from organizing a majority of its constituency. Similar to the Confederation, there are huge contrasts between the capacities for collective action of some privileged groups and the broader pattern of chambers struggling to overcome the legacy of a flattened civil society. Nevertheless, the chambers movement does seem to be more firmly embedded in local politics and business than the employer associations. Sectoral chambers are unusual to Poland and their competition with employer associations undermines the inherent advantages of privileged groups. Like the Confederation the Chamber provides little in the way of private goods to members and charges very low fees. Unlike the Confederation, it is not dependent on membership fees, having inherited valuable assets from its communist predecessor and engaging as it does in a wide range of successful commercial endeavors. Also in contrast to the Confederation, members can be expelled for non-payment of fees.

Internal politics. Although the Chamber has strong member chambers from state-dominated or privatized sectors, these chambers do not dominate. In 2000 no representative of state industry sat on the Chamber's presidium. The Chamber is designed to be run by consensus of functionally defined groups (including territorial chambers, sectoral chambers, bilateral chambers, and others), each of which is proportionally represented in the Chamber's presidium and elects one vice president. Many allege, however, that the Chamber and primary chambers are used for the furtherance of the political and business careers of their elites. In contrast to the Confederation but like the Club, the founding elites are still entrenched in the Chamber, despite the fact that they have to face election. While the internal politics of the Chamber are murky, it seems that competition is mostly carried out along the lines of personal cliques. The fact that the Chamber is an association of associations, together with its independent finances based on its inheritance from communism and the sale of services, gives some activists the freedom to profit from their position in the chamber of commerce.

The Chamber and national politics. Some of the Chamber's sectoral member chambers resemble their counterparts in the Confederation in being similar. The Chamber shares the Confederation's right to statutory consultation, but also its inability to react adequately to all the relevant bills, and its complaint that its opinions are usually ignored. The Chamber has perhaps had more elected politicians in its upper ranks than any of the other business associations, but the organization itself does not seem to have been associated with any particular party. Like the Club it engages in campaigns of personal networking. Unlike the Club it is no darling of the media.

The Polish Business Roundtable (The Roundtable)


Origins. The Roundtable was founded in 1991. It is explicitly modeled on the U.S. Business Roundtable, which was founded in 1972. It does not seem to have been significantly influenced by the European Roundtable. The founders of the Roundtable come from a diverse range of backgrounds: the nomenklatura, the intelligentsia, private business under communism, and foreign businesspeople. Unlike the other organizations, the Roundtable from its very beginnings contained a significant proportion of returned émigrés.

Collective action. The Roundtable consists of fifty to sixty individual members who can only join by invitation. They represent a wide range of sectors. Many of the members are the owners, or predominant shareholders, of holding companies which in themselves have an encompassing interest in the Polish economy. Roundtable members are prominent on the list of richest Poles. Although the Roundtable has an encompassing interest in the Polish economy, it is in fact a fairly well integrated network of businesspeople rather than a classic latent group. The other way in which the Roundtable has overcome the collective action problem is that it comprises a small number of very large businesses, each of which can make a substantial difference within the organization. The Roundtable provides very little in the way of private goods, apart from some social opportunities and occasional private lobbying for members. However, the members tend to be so powerful that they do not need the organization's aid in the pursuit of private political goods. In sum, the Roundtable has collective-action advantages but they are not derived from the communist economic structure.

Internal politics. The Roundtable is a tightly knit, homogeneous group which seems to operate on the basis of a fairly stable consensus amongst its leading members. The political and economic weight of the individual members, and their busy schedules, mean that the organization is not used as a vehicle for individual careers and is not the scene of repeated power struggles. The Roundtable is on its fourth president since its foundation, with none having sought a second term. The presidents have been from intelligentsia, private business under communism, and returned émigré backgrounds. There are a substantial number of foreigners and representatives of big foreign businesses in the Roundtable but they mostly tend to be rather passive.

The Roundtable and national politics. The Roundtable is not a superlobby with communist roots. At all levels of the state, the Roundtable is taken seriously. Although some individual members are associated with and provide substantial funding for political parties, the organization itself has maintained a convincing non-partisan stance. In its lobbying the Roundtable uses its members' personal political resources. It relies on government contacts to catch bad policies before they happen and to talk with policymakers '"behind closed doors." Many interviewees agreed that most members, if they asked, would receive an audience with the President.

The Polish Confederation of Private Employers (The Private Confederation)


Origins. The Private Confederation was set up by the leadership of the Roundtable in 1999 as a rival to the official Confederation of Polish Employers. This was a reaction to a failed putsch within the official Confederation, the leadership of which was perceived to be incompetent, clientelistic, and dependent on the state sector. The plan was to replace the president at the time, Wojciech Kornowski, with the Roundtable's president Henryka Bochniarz, who at the time was more highly regarded than Kornowski. The Private Confederation was set up to counter the perceived dominance of lobbies in the official Confederation.

Collective action. The membership of the Private Confederation is a politically sensitive issue as it has been vital to the organization's competition with the official Confederation. As of December 1999, the Private Confederation had seventeen member organizations, employing over three hundred thousand. Interestingly, many of those workers are employed by the membership of the Polish Copper Employers' Association. This is a classic privileged group and in many ways a classic post-communist superlobby. However, the majority of the founding members seem to have been new associations created more or less directly by the Roundtable. while a smaller number were previously unaffiliated associations and defectors from the official Confederation." The Private Confederation has sought to attract members partly through an emphasis on its private sector credentials, and partly through its superior political ability, but also through the offer of the real and professionally delivered private goods that are completely lacking from the official Confederation. It is not a collection of revamped communist-era groups, and since it was sponsored by a pre-existing association neither has it had to overcome the collective action problems of a flattened civil society.

Internal politics. So far it seems there has been little turmoil within the Private Confederation. It remains dominated by the founding elite, all like-minded business leaders with a history of close cooperation within the Polish Business Roundtable. This is likely to change with the growth of the Private Confederation to embrace a wider variety of interests and opinions. So far there is no sign of Polish Copper using the Private Confederation to wrest concessions from the state. Polish copper is, to a great extent, a model post-communist conglomerate in that it has, until the recent downturn, successfully added a large telecommunications business to its core role in commodities.

The Private Confederation and national politics. The Private Confederation can hardly be a superlobby itself since, to some extent, it subscribes to the theory that such lobbies are harmful to the Polish economy and polity. In fact, this has been one of its principal criticisms of the official Confederation. However, it also criticizes the official Confederation on the basis that its incompetent lobbying allows the state complete autonomy from business. It fought hard, and ultimately with success, for its admission to the tripartite bodies on which business representation was hitherto monopolized by the official Confederation. The Private Confederation has shown some tendencies towards politicization. In its start-up phase it was clearly sponsored by some parties of the coalition government. These parties have now being eliminated from parliament or have been swallowed up by the new Citizens' Platform which has strong links to the Club. Along with the official Confederation, the Private Confederation now seems to be an accepted partner of the new left-wing coalition government. The Private Confederation follows the Club's example in a successful use of the print media. It also undoubtedly inherited a formidable bank of personal connections from the Roundtable.

Conclusions


On the eve of the transition Poland had a more developed civil society, including the economic sphere, than any other communist regime and its state sector was well known to be plagued by superlobbies. The lack of domestic intervention contrasts with the other East-Central European countries where the state moved quickly to sponsor business associations as participants in tripartite institutions. In the Hungarian case, for example, the state went as far as making chambers of commerce obligatory for businesses. The fact that national governments have been more interventionist in other East-Central European countries does not necessarily mean that the Polish case is unique. The Polish case suggests that where superlobbies have emerged this is not simply a reflection of the collective action advantages bestowed by the communist economic structure. Poland obviously had a communist economic structure and, as noted above, was the country where the emergence of superlobbies was most likely on the basis of bottom-up factors. If bottom-up factors could not produce genuine superlobbies in the particularly propitious Polish case, it seems unlikely they could do so in other cases.





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